Jul 28 - McClatchy-Tribune Regional News - Onell R. Soto The San Diego Union-Tribune



Supporters of a novel way of financing solar installations said Tuesday that they plan to negotiate in Washington and fight in the courts and Congress to save the program.

For now, unless there is some kind of resolution, the financing to make energy efficiency improvements through tax assessments will remain out of reach for San Diego homeowners and those in 13 other local municipalities.

Risk-wary federal officials say the government-backed financing known as PACE, or Property Assessed Clean Energy, is a loan that conflicts with mortgages.

Fannie Mae and Freddie Mac, federally chartered corporations that guarantee more than half the residential mortgages in the country, say they won't touch properties with PACE-financed improvements.

 The Federal Housing Finance Agency, set up two years ago to oversee the institutions after the subprime crisis, agrees.

They say the assessments are a loan that must be paid off before the primary mortgage, and they unfairly change the position of mortgages if they are put in place after a home loan is in place.

And that's put the future of the programs in doubt, despite early support from the Obama administration and $150 million in federal stimulus funding.

Solar contractors say they have lost business as a result.

But proponents of the programs -- which can help pay for things such as new solar installations, better insulation and replacement windows -- say the financing is similar to other government assessments that have long paid for sidewalks, sewers and water lines.

"This is an all-hands-on-deck moment," said Cisco DeVries, who devised the assessments while working in Berkeley's city government, during a conference call with local government officials Tuesday.

DeVries, who now heads Renewable Funding, a private group that has a contract to implement the program statewide, said the quickest prospect for the financing is in Congress.

Sen. Barbara Boxer has introduced a bill designed to save the program in the Senate, and similar legislation is moving in the house.

But, so far, no Republican has agreed to support the bills, he said.

Meanwhile, Fannie Mae, Freddie Mac and FHFA are facing lawsuits. California Attorney General Jerry Brown announced a federal lawsuit on the financing in San Diego earlier this month. This week, Sonoma County joined the fight with its own lawsuit. Leaders in Babylon, a village on New York's Long Island, say they are also going to sue.

They say that the federal mortgage giants have incorrectly classified the financing and, as a result, made it impossible to use.

An FHFA spokeswoman said the agency will fight the litigation but can't comment on specific allegations because of the lawsuits.

John Haig, Energy and Sustainability Director for Sonoma County, said his county will continue offering the program, although now applications have big disclaimers explaining that mortgages may be affected by the financing.

"We're going to continue operations, exploring options and modifications," he said.

So far, he said, 10 applications have been put on hold or withdrawn since the controversy flared up in May.

The county has funded 967 projects totaling $40.4 million, he said.

Such funding was scheduled to become available in San Diego County this summer, but it is now on hold.

Onell Soto: (619) 293-1280; onell.soto@uniontrib.com; follow me on Twitter: @onellsoto

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